File photo of the Champion-7 offshore field complex. The complex – lying in 30m of water and housing living quarters for 160 staff – is by far the largest offshore oil and gas producing asset in Brunei Darussalam
Though the recent slump in oil prices has affected Brunei Darussalam’s economy, significant strides forward have been made in the country’s oil and gas industry with regard to local content
The current situation in the oil and gas industry was touched on in a speech by Pehin Datu Singamanteri Colonel (Rtd) Dato Seri Setia (Dr) Awang Haji Mohammad Yasmin bin Haji Umar, the Minister of Energy and Industry at the Prime Minister’s Office at the recent Brunei Shell Joint Venture (BSJV) SME Event in Seria.
The minister’s speech highlighted the importance of facing the reality of current oil prices. “In this economic climate, SMEs (small and medium enterprises) need to be innovative and use technology to find more efficient ways of doing things and delivering their projects. SMEs should also find ways how to contribute to the nation with their business.”
Brunei LNG Plant at Lumut
Thus, it is efficiency, he said, that will be the critical factor to strengthen companies and their capacity to succeed in this challenging environment.
He also touched on the government and industry’s collaboration in driving local business development (LBD) in the oil and gas industry, speaking on what has been achieved over the last five years. “We have set up a robust framework, based on the four quadrants of basic, development, core and highly specialised activities, which has ensured two things: a level playing field which actively prevents monopoly, and better opportunities and growth for our SMEs.” This renewed focus, he continued, has also boosted local content, both in terms of local spending and use of local workforce.
The local content spending was around 54 per cent in 2015, as opposed to being less than 15 per cent in 2010. As for employment, there are now more than 16,495 locals working in the oil and gas sector out of the total of 26,205 working in the industry. This is 63 per cent of the total, against less than 50 per cent in 2010.
He also shared that 43 local companies have been awarded contracts for the first time by BSJV, worth a total of $921 million. “While there has been substantial progress, there is still a lot to do to achieve our 2035 oil and gas target for employment as it is more challenging now with the current economic climate.”
He asserted that the Energy and Industry Department at the Prime Minister’s Office (EIDPMO) will continue to ensure compliance to the LBD Directives issued in 2011 and 2012 to ensure a pro-business environment in the oil and gas industry. These initiatives will be replicated for the non-oil and gas industry as well, he added. “I would urge all SMEs to not give up, even in this time of low oil prices and uncertain economic environment.
“The government is establishing a statutory body known as Darussalam Enterprise, which will monitor and nurture the growth and development of local enterprises in Brunei Darussalam, including small and medium enterprises”
“We can see that BSP remains committed to local spending, a commitment that is lauded by the government. I firmly believe that the future is still bright for Brunei but the environment now needs the hard work, innovation and collaboration of all those concerned – the government, the operators and SMEs.”
He also advised them not to be distracted by social media chatter and viral rumours, asserting that honesty and openness in communication with the government is crucial. “The government will continue to provide an environment and a system for SMEs to grow and develop,” he said. “The operators need to continue to provide business opportunities and development assistance for SMEs to survive in this environment.
“SMEs need to be willing to learn, grow, be transparent, be more efficient and innovative, and reach a status where they can compete effectively domestically and regionally,” he added.
The minister also announced the establishment of Darussalam Enterprise (DARe) to monitor and nurture the growth and development of local enterprises in Brunei. “The government is establishing a statutory body known as Darussalam Enterprise, which will monitor and nurture the growth and development of local enterprises in Brunei Darussalam, including small and medium enterprises,” he said in the speech. The private sector will hold 85 per cent of the membership in the Board of Directors of DARe, which will ensure that the direction and development of SMEs through DARe will be driven by the private sector, the minister added.
DARe will be in charge of industrial sites management under the Industrial Management Sites Division (ISM) – previously under the Brunei Industrial Development Authority (BINA) – to facilitate opportunities for SMEs. A Business Support Centre is also to be launched in April 2016, which will house the important agencies required for business support, under a single roof. “This will encourage more SMEs to venture into business,” the minister added.
Additionally, DARe will align and combine the various initiatives that are ongoing in the public and private sector, including programmes under Brunei Shell Petroleum Company Sdn Bhd (BSP), such as the effective Energy Business Academy and the longstanding LiveWIRE programme.
“These programmes will be leveraged for the benefit of the overall industry sector, including the oil and gas sector,” he said. “With DARe, we expect to help Brunei SMEs to be competitive domestically and eventually regionally as well. I hope by doing all of this, gone will be the days of one-contract SMEs.”
In addition, work is underway to expand the Energy Industry Competency Framework (EICF) to the whole industry sector of the country. “Over the last five years, you may have known about the EICF. This is where the government has started the initiative to train our locals to match the requirements of the oil and gas industry in Brunei.
“Over the next five years, we will expand this to the whole industry sector in Brunei. This initiative will be called the Industry Competency Framework or ICF, which will be part of the national manpower agenda,” the minister said. “We will establish the necessary framework to harness the potential of our locals to work in the industry and thus ensure that our local SMEs will have capable local employees that are industry-ready.”
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